Benjamin Franklin is credited with the old saying “By not being prepared you’re setting yourself up to fail.” When private companies begin their IPO process, it is an extremely crucial time and requires a meticulous and strategic preparation to ensure success.

The management of this complicated and highly regulated process can be time-consuming and overwhelming for any team. The IPO process involves multiple parties, including investors, bankers, underwriters and investors. It is crucial to present an effective equity narrative that meets market expectations and offers potential investors the opportunity to understand the company’s growth plan.

One of the first steps in IPO preparation is to conduct an IPO readiness test, which will consider what a company’s needs to appear like once it is publicly traded. This allows teams to identify any gaps that require attention early enough to be addressed prior to the IPO timeline. For instance, the majority of venture-backed companies do not have financial statements that meet the standards for compliance with the public company. A IPO readiness assessment will flag this issue, and help legal and finance teams to correct the situation well before the IPO process gets underway.

Once the initial work of preparation is completed, it’s now time to plan for the ongoing reporting requirements of regulatory reporting. This includes gaining access to the Securities and Exchange Commission (SEC) EDGAR system. It’s also crucial to create an internal working group within the IPO team to work with your law firm to prepare EDGAR and iXBRL example documents. This will include a person who is responsible for uploading exhibits to the SEC and also working with the financial printer/SEC files.

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